Redistributing accrued money into other Funds

m0ssim0

Since starting work with the Company I am with I have been lucky as I have benefitted from a non-contributory Company pension scheme. The Company currently pay 18% and this will increase up to a maximum of 22% over the coming years. The Company currently use Fidelity as their Provider and their platform allows me to self-select funds within my Pension pot. I made the decision some years ago to go down the self-select route rather than just accepting the Lifestyle option as I wanted greater diversification and also wanted to chose some tracker funds in order to reduce the impact of costs.


My pot still contains funds which were invested in under the previous Lifestyle strategy and I have noticed that some of these, Newton Real Return being one of them, have been performing badly over the past 5 or so years. I'm also concerned, that given my age (41) some of these funds are more cautious in their outlook and are 'throttling' the growth potential of my overall portfolio. I am therefore considering re-distributing the accrued money in these funds into the funds where my current contributions are being invested. My question is, when doing this, should I be looking to drip-feed this money into these funds in order to help mitigate the impact of market timing? I've spoken to Fidelity and they don't offer any automatic monthly transfers in, so it would probably mean arranging bo-monthly or quarterly lump sum transfers if I was to go with this option ( I was told that I may incur charges if was to try and do it more often). Alternatively, I could just bite the bullet and make the transfers in one go. What do people tend to do in a similar situation, do they go down the lump sum transfer in route?

bostonerimus

m0ssim0 wrote: »

Since starting work with the Company I am with I have been lucky as I have benefitted from a non-contributory Company pension scheme. The Company currently pay 18% and this will increase up to a maximum of 22% over the coming years. The Company currently use Fidelity as their Provider and their platform allows me to self-select funds within my Pension pot. I made the decision some years ago to go down the self-select route rather than just accepting the Lifestyle option as I wanted greater diversification and also wanted to chose some tracker funds in order to reduce the impact of costs.


My pot still contains funds which were invested in under the previous Lifestyle strategy and I have noticed that some of these, Newton Real Return being one of them, have been performing badly over the past 5 or so years. I'm also concerned, that given my age (41) some of these funds are more cautious in their outlook and are 'throttling' the growth potential of my overall portfolio. I am therefore considering re-distributing the accrued money in these funds into the funds where my current contributions are being invested. My question is, when doing this, should I be looking to drip-feed this money into these funds in order to help mitigate the impact of market timing? I've spoken to Fidelity and they don't offer any automatic monthly transfers in, so it would probably mean arranging bo-monthly or quarterly lump sum transfers if I was to go with this option ( I was told that I may incur charges if was to try and do it more often). Alternatively, I could just bite the bullet and make the transfers in one go. What do people tend to do in a similar situation, do they go down the lump sum transfer in route?

Look at your allocations no more often than quarterly and then make any changes in lump sums.

kidmugsy

m0ssim0 wrote: »

I have noticed that some of these, Newton Real Return being one of them, have been performing badly over the past 5 or so years.

Has it really performed "badly" i.e. failed to achieve what it set out to achieve?

m0ssim0

It depends on your point of view. It's failed to better the benchmark for this fund type on 3 out of the 5 last years. So from my perspective it has performed 'badly' and no it hasn't set out what it's attempted to achieve. Whilst I'm no expert I would have thought the fund manager would aspire to better his peers.This fund was one of the core ones under the lifestyle strategy and whilst I no longer select this way to invest my contributions I believe it's been 'dumped' under revamped lifestyle strategies my Company now offers.

Thanks for your response bostonerim.

Thrugelmir

m0ssim0 wrote: »

Newton Real Return being one of them,

Why did you buy the fund originally? As it's a very much a contrarian fund. Currently holding 20% in "cash" assets. Which shows the fund managers current line of thinking very clearly. Capital preservation. Gains are only numbers on paper until you liquidate them into hard cash. You aren't out to beat the market but other investors.

m0ssim0

When I joined the Company 20 odd years ago, when I was 21, my investing experience was very limited so like many people I opted to go down the lifestyle route and this was one of the core funds. Whilst my contributions are no longer investing in this fund I have accrued a pot of money from sometime back which I believe can work harder for me in more of a equity focused fund. I believe my age can give me the flexibility to reinvest this money in an equitiy fund rather than the more conservative approach of this fund.

jamesd

Newton Real Return is a well regarded absolute return but the last five years haven't provided much opportunity to demonstrate their downside protection relative to others in the sector or more broadly. Chasing the highest returns in an up market isn't what this sector is about.

The sector as a whole seems not to match your current thoughts on how you want to be positioned, so switching out seems to be the thing for you to do.

m0ssim0

Looking at its performance the annualised 10 year return is 3.91%, when you take charges into account I'd argue there wouldn't be much difference between the returns a long fixed term savings account would have provided over the same period. Whilst I'm sure the fund has its advantages for some people, from my pension perspective, when I do need an element of growth during my 40s I think it would be better to move the case elsewhere

jamesd

All fund performance figures are after charges have been deducted.

m0ssim0

Thanks for making me aware of this Jamesd, that was something I wasn't aware of. Always happy to learn

Thrugelmir

m0ssim0 wrote: »

Looking at its performance the annualised 10 year return is 3.91%, when you take charges into account I'd argue there wouldn't be much difference between the returns a long fixed term savings account would have provided over the same period.

The past 10 years has been somewhat unusual. Both equity and bond markets particularly driven by an investors chase for yield (income). With little to no interest in the actual financial performance of the underlying equity investments.